CYBG (CYBG) has narrowed its net interest margin and cost savings guidance for 2019, following last year’s merger with Virgin Money.
The challenger bank expects a net interest margin of between 1.65 and 1.70 per cent, although that is still down on 2.17 per cent in 2018 due to an increasingly competitive mortgage market. Annual cost synergies of £150m are expected by 2021, ahead of the £120m previously flagged.
A spokesperson for CYBG said the improved guidance followed management's decision to take a more “conservative” approach to the savings to be extracted at the outset of the merger.
The net interest margin came in at 1.72 per cent during the first quarter, while the loan book was up 1.4 per cent, led by better-than-expected 1.5 per cent growth in mortgages. Impairment charges also remained low, equivalent to 0.22 per cent of average customer loans.
In April, the banking group – which also operates the Clydesdale and Yorkshire banking business – was forced to warn that increased impairments for legacy mis-selling of payment protection insurance would wipe 100 basis points from its common equity tier one (CET1) ratio, taking it below a target range of 12-13 per cent. At the end of December that ratio stood at 14.5 per cent.
